O'Malley offers buyout to state workers

Employees offered $15,000, plus $200 for each year of service

December 07, 2010|By Annie Linskey, The Baltimore Sun

Gov. Martin O'Malley offered state workers a $15,000 buyout Tuesday to quit by the end of January — the latest effort by officials to cut costs as they look ahead to another huge budget shortfall next year. The offer, which adds $200 per year of service, is the first of its kind extended by the O'Malley administration.

"This is part of many things that we're going to have to do" to close the budget gap, O'Malley said after establishing the State Employees' Voluntary Separation Program by executive order. "It's going to be painful and difficult."

O'Malley said the plan would help avoid layoffs, an oft-repeated goal. The director of the state's largest public-sector union said he had been pushing for a buyout program for years.

Patrick Moran, executive director of the Maryland chapter of the American Federation of State, County and Municipal Employees, said the program should encourage people "who are on the cusp of retirement" to leave earlier.

"That will allow the state to have some solid long-term savings," Moran said.

If there are enough takers, he said, the state could stop furloughing employees. Maryland's 79,000 state workers have seen their pay reduced three years in a row. The work force has contracted by 1.6 percent since O'Malley took office, shedding 1,286 positions since 2007.

O'Malley's chief of staff, Matt Gallagher, would not say how much the administration hopes to save with the plan, but he said officials are looking at it as a way to help eliminate the 500 executive branch employees cut by lawmakers in this year's budget.

"There is an opportunity to go higher than 500," Gallagher said. "So far, there seems to be a lot of interest. It is generating a lot of chatter."

Interested workers must apply by Jan. 4. Not all who apply will be approved; officials want to spread the departures evenly among state agencies.

Gov. Parris Glendening established a slightly different buyout program during his administration. Gov. William Donald Schaefer considered, but ultimately decided against such an offer, out of concern that it would not be cost-effective and would deplete upper management.

Gallagher said the O'Malley plan is different from earlier buyout offers in that it was designed to pay for itself in the current budget year.

O'Malley's fiscal team is working on next year's budget, a spending plan that will have to take account of an expected $1.6 billion gap between revenues and expenditures. O'Malley has said the plan will rely on a "continued diet of cuts" rather than any new taxes.

The buyout, rendered in a single payment, would be subject to federal and state income taxes. But it is a matter of some question whether assessments for Social Security and Medicare would be withheld, said Stuart Levine, a Baltimore tax attorney.

Levine said the payment appears "rather small" — about a year's mortgage payment for most people.

"It gives you the ability to pay your mortgage but not put your groceries on the table," he said.

The offer does not apply to employees of the state's university system or to workers in the legislative and judicial branches.